The fine folks on Capitol Hill have plenty to do just keeping the nation on the straight and narrow. We're fighting wars in Afghanistan and Iraq, inflation is rearing its head, banks and other businesses are on the skids as we enter a recession, and we're gearing up for an election. Isn't that enough? Apparently, not for Rep. John Conyers , D-Mich., who often uses his position on the Antitrust Task Force (a subset of the House Committee on the Judiciary) as a bully pulpit.
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Conyers announced Wednesday a hearing on rising gas prices and rising gas company profits scheduled for May 22. The news isn't surprising; after all, it's an election year, but here's the kicker: He's invited Abdalla Salem El-Badri, secretary general of OPEC, to put in an appearance. What's more, Conyers acknowledges the expense for the OPEC minister to come to Washington all the way from Austria and has offered to teleconference with him instead.
Where do I start? First, I suggest that if El-Badri wanted to attend, which is highly unlikely, OPEC can certainly afford to pop for a plane ticket, if not a private jet. But that's just an aside.
The point is that this is part of a goofy effort by lawmakers to break up OPEC by using antitrust laws (which, for those of you sleeping for the last 118 years) were first used to break Standard Oil's chokehold on petroleum. While enchantingly evocative of bygone days, the effort misses the mark by a mile.
Certainly there is no doubt that OPEC is a cartel. But it is made up of the actual nations who produce oil -- sovereign states that have the authority to do what they will to protect their nations, and their oil profits -- not companies, which is what antitrust law is tasked to regulate. The effort to apply such laws is like the European Union asking through legislation that the U.S. curtail greenhouse gas emissions because they affect the residents of other nations. We will do it when we want to and at our own pace, thanks.
So why invite OPEC to participate in a hearing which, if it were actually honest, would admit that the war in Iraq is a big factor in increasing oil prices, as is speculation on Wall Street?
Well, because lawmakers have been itching to pass a law that says the Department of Justice and Federal Trade Commission can sue OPEC and break the cartel. By inviting OPEC's secretary general, they can send up a test balloon to see if OPEC is dumb enough to subject its members to the jurisdiction of American law.
The idea is, ultimately, yet another effort by a Washington lawmaker to make news, on the theory that any press is good press if it helps your constituents remember your name in November. - Cecile Kohrs Lindell
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An altrnative veiw on OPEC and Antitrust:
OPEC is a cartel and not a country. OPEC countries are not oblvious to concerted critical action or commentary from Oil Consuming Nations (how about forming a new cartel?). Almost nothing that is consumed in the Middle East is produced there including food, electronics, and other luxury items which are vitla to their citizenry.
Defending Hillary
Psst. Her cheap pander on OPEC is good policy.
By Timothy Noah
Posted Wednesday, May 7, 2008, at 7:12 PM ET
OPEC headquarters in Vienna, Austria
Hillary Clinton is having a really bad day, what with Tim Russert, George McGovern, and assorted other political experts finally saying, after her worse-than-expected showing in North Carolina and Indiana, that a Clinton nomination is no longer plausible. Hey, I demonstrated that it was no longer plausible five days ago—using data, it turns out, that understated Obama's advantage! But more respectable types held back until yesterday, when Hillary's last-ditch metric—the prospect of winning not a delegate majority but a popular-vote majority in the primaries and caucuses if you included Michigan and Florida, whose primaries, even Clinton previously recognized, lacked legitimacy—became officially unattainable. Now Clinton's only option is what David Corn of Mother Jones calls a "nullification strategy," i.e., "Endorse me, superdelegates, because … because … because I say so, damn it!" Hillary will likely remain in the race until Obama secures the number of delegates necessary to become the presumptive nominee, and as an orthodox arithmecrat I would support that decision. But from now on, the press will pay her minimal attention. A New York Post headline put it with succinct cruelty: "Stick a Fork in Her—She's Done."
Before Hillary departs the stage, though, I would like to defend her against NOPEC nay-sayers.
Clinton has been getting a lot of criticism, most of it deserved, for pandering frantically in a last-ditch effort to seize the nomination. Attention has mostly focused on her gas-tax timeout, a popular but unsound proposition. (Some but not all the reasons why are summarized here.) But the same political commentators who, quite appropriately, mocked the gas-tax suspension as a cheap stunt similarly mocked Clinton's related proposal to bust the OPEC cartel. Maureen Dowd called it "inane." Josh Marshall said it demonstrated "the widening gap between reality and her campaign trail statements." Politico's Ben Smith observed with condescension that it was "very hard to figure out what exactly she means by the threat to break OPEC."
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Clinton's plan is neither vague nor foolish. OPEC is a cartel. Cartels violate the Sherman and Clayton Antitrust Acts, and the Justice Department doesn't typically tolerate them. The New Yorker's financial columnist, James Surowiecki, has noted,
[I]n the nineteen-nineties the Justice Department broke up international cartels in vitamins, lysine, and graphite electrodes, fining companies hundreds of millions of dollars and sending executives to prison. OPEC is a much bigger target, but it's no less deserving. If the concern is foreign policy, then use the World Trade Organization. Six OPEC members already belong to the WTO, and Saudi Arabia is eager to join. Perhaps we could ask the Saudis whether, as a condition of membership, they'd be kind enough to stop orchestrating an international price-fixing conspiracy.
Too late for that last suggestion; Saudi Arabia joined the WTO in 2005. Otherwise, though, Surowiecki remains dead-on.
The courts have repeatedly thrown out lawsuits aimed at compelling the Justice Department to bust OPEC just like it busts other cartels. The stated reason is that OPEC enjoys "sovereign immunity." But OPEC isn't a country. It's a cartel. Even if OPEC were a country by some arcane legal definition, that still wouldn't immunize it in any legitimate way from antitrust law. Sen. Herbert Kohl, D-Wisc., has pointed out that the Foreign Sovereign Immunities Act states explicitly that the doctrine of sovereign immunity does not protect a nation's commercial activity. Since the courts refuse to recognize this, Kohl has repeatedly over the years introduced legislation ("NOPEC") granting the Justice Department antitrust jurisdiction over OPEC. Last year's version cleared both House and Senate with veto-proof majorities as part of an energy bill, but NOPEC was later stripped out by a House-Senate conference committee. Clinton proposes that if Congress and the courts continue to shield OPEC, the executive branch can take its case to the WTO, as Surowiecki suggested.
Hillary's timing, it's true, could be better. If you're going to take on OPEC, it's probably best to do so not when oil prices are up but when they're down in order to minimize the ability of OPEC's biggest player, Saudi Arabia, to retaliate by temporarily reducing or cutting off supply, as it did in 1973. Hence my battle cry in November 2001, "Kick OPEC While It's Down!" (This is a longstanding Chatterbox hobby horse.) But I may be exercising too much caution. It's been argued that the 1973 oil crisis was more the product of President Nixon's wage and price controls and subsequent legislation to ration gas than of the Arab oil embargo, which was ultimately unenforceable because the oil market was and remains international. Steven Pearlstein, business columnist for the Washington Post, notes in a May 7 column that busting OPEC might cause Arab governments to withhold investment capital from the United States. Even so, he agrees that busting OPEC is a good idea:
[O]ne should not underestimate how much Arab elites value the respect they are accorded and their access to our markets, our companies and our top officials. After a couple of years of being treated like political and economic pariahs, they might begin to realize that there will be a cost to their piggy price-fixing behavior.
Are you listening, Barack